Health Reimbursement Arrangement
The HRA or Health Reimbursement Arrangement is an employer-sponsored plan to reimburse a portion of your and your eligible family member’s out-of-pocket medical expenses, such as deductibles, coinsurance, and pharmacy expenses.
An HRA is not an account. Employees cannot withdraw funds in advance and then use them to pay medical expenses. An HRA is a type of account that employers offer to employees in order to help them save for healthcare expenses. It is not a bank account, and the funds cannot be withdrawn from the employer’s HRA. Employees can only withdraw money when they are paying for qualified medical expenses such as copays, hospital payments, blood pressure monitor, over the counter drugs and prescription drugs.
There is no federal limit on the amount employers may contribute to an employee’s group health plan HRA. When setting up the benefit, employers must establish a maximum HRA amount that would be made available to individuals, sometimes referred to by the IRS as a reimbursement limit Your employer has designated a specific dollar amount to credit to the account (either monthly or annual contributions). You choose which out-of-pocket qualified medical expenses you would like to submit for reimbursement.
Unused account balances roll over to the following plan year, provided your employer continues to offer the program, and you remain enrolled. For certain types of HRAs, you (and possibly other household members) must be enrolled in a health plan to use the money.